Net neutrality rules proposed by the U.S. Federal Communications Commission could upset a complex mobile telecom marketplace and lead to fewer handset choices and fewer smartphone applications, a mobile trade group said Monday.

Net neutrality rules could upset a "virtuous cycle" of mobile development and innovation in the U.S., said officials with CTIA, which represents several mobile carriers. CTIA was one of several groups making a last pitch to the FCC about net neutrality on Monday, the deadline for reply comments in the agency's net neutrality rulemaking proceeding.

"To us, it's a completely interdependent ecosystem," said Christopher Guttman-McCabe, CTIA's vice president for regulatory affairs. "You can't touch one [segment of the mobile industry] without impacting the others."

The FCC asked whether it should extend proposed net neutrality rules to mobile broadband networks in its notice of proposed rulemaking, released in October. CTIA opposes formal net neutrality rules for wireline carriers, and is even more concerned about new regulations in the mobile industry, where bandwidth limitations are more pronounced.

There have been no complaints of mobile broadband carriers selectively blocking or slowing Internet content, said Steve Largent, CTIA's president and CEO. "We're kind of wondering, where's the harm?" he said. "There are no customers coming to the FCC saying, 'the wireless industry has wronged us.'"

Others planning to file comments Monday called for net neutrality rules. The FCC rules, as proposed, would prohibit broadband providers from selectively blocking or slowing legal Web content or applications. The rules would also require broadband providers to tell customers about their network management practices.

The FCC moved to formalize a set of net neutrality principles about a year after it prohibited Comcast from slowing its subscribers' access to peer-to-peer services and other applications. Comcast appealed the FCC's enforcement of its 2005 net neutrality principles, and earlier this month, a U.S. appeals court threw out the FCC's Comcast decision.

While opponents of new net neutrality rules have argued there have been few examples of problems, in recent weeks DSL (digital subscriber line) provider Windstream was accused of hijacking subscriber search queries, and cable-based broadband provider RCN settled a lawsuit accusing it of blocking peer-to-peer traffic, noted Derek Turner, research director of Free Press, a media reform group and net neutrality advocate.

"It's clear that violations of the open Internet are ongoing and kept secret from consumers," Turner said in an e-mail. "If the FCC fails to establish basic rules of the road, we can expect much more of the same from broadband providers. The fundamental question before policymakers is: Who should be trusted with the future of the Internet, these companies that have repeatedly violated open Internet principles, or consumers?"

The question about net neutrality rules is not whether they're needed, but when the FCC will act, said the Center for Media Justice, the New America Foundation, Consumers Union and Media Access Project in a joint filing Monday.

"The public interest groups submitting these comments maintain that the Federal Communications Commission must act to preserve the open Internet, and that it should do so now," the groups said. "The record developed during this proceeding is clear, and the need for the rules proposed by the commission becomes even more clear with each disclosure of additional broadband Internet access service provider misconduct."

Content discrimination by broadband providers threatens the "structure and functioning" of the Internet, the groups added. Net neutrality rules are "essential to promoting free expression, economic opportunity, civic participation, civil rights, and social equality online and in society at large," they wrote.

But broadband providers are working to provide subscribers with the best service they can, countered Bright House Networks, a broadband provider based in Orlando, Florida.

"Proponents of broadband Internet regulation claim that every form of network management and every claim of 'discrimination' in handling traffic may be challenged and must be presumed unlawful unless the network operator proves a public benefit and a management technique as narrowly drawn as possible," the company said in its filing Monday. "There is no record to support such a rule or such presumptions. Instead, the record is that subscribers are being given better and better access to the Internet."

Supporters of new net neutrality rules haven't showed the need for new regulations, added James Cicconi, senior executive vice president for external and legislative affairs at broadband provider AT&T. Backers of significant new regulations have a special burden to prove their case, Cicconi wrote on AT&T's public policy blog.

"Yet, after six months in the FCC's comment process, and nearly six years of arguing the issue, proponents of extreme net neutrality regulation have failed utterly when it comes to making their case," he said. "To be sure, they've used fear masterfully to create the impression of a crisis, and hyperbole to manufacture a threat. But when the time has come to put-up-or-shut-up, those same groups have failed to identify any existing problem they are trying to solve, or indeed any specific conduct the government must act to correct."

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